Long Version Short Version

10 Golden Rules 10 GOLDEN RULES

Guidelines for Exclusion/Limitation of Liability Principles of the Sulzer Corporation for the
To reduce the probability, and in particular the severity, of the liability risks we are Reduction of Risks in Sales Transactions
exposed to, you are advised to you comply with following:

1. Get the Legal Experts involved 1. Get the Legal Experts involved

All customer provided clauses that deal with warranty/guarantee, liability, indemnity, This always applies if you feel unsure regarding the
hold harmless, defence, and risk transfer, must be analyzed by in-house or external meaning of a contract clause.
legal counsel, unless you are familiar with such clauses, understand their meaning and
purpose, and know how to modify them to protect our interests. Legal counsel is likely
to have analyzed similar clauses before, and he/she will provide you with comments
and contract language that serve to protect our interests under the prospective
contract.

2. Exclude Consequential Damages 2. Exclude Indirect and Consequential Damages

Subject to items 3 and 4 hereof, and to the extent permitted by the law applicable to the The contract wording must contain a statement saying
contract, you must exclude by proper contract language any liability, whether as a that we will not pay damages related to lost profits,
result of breach of contract, tort (including negligence), strict liability or otherwise, for business interruption etc., unless we are compelled to
special, incidental, indirect or consequential damages, such as but not limited to, loss of accept respective liability under compulsory law.
profit or revenue, loss of use, loss of contract, cost of capital, cost of purchased or
replacement power, increased cost of operation, or claims by customer's customers for
such damages.

3. Determine Liquidated Damages 3. Determine Liquidated Damages

Liquidated damages for failure to meet delivery or completion dates can be accepted, You may accept paying liquidated damages (this is a
provided they are reasonably limited per day/week and in the aggregate. pre-estimate of potential damages) for late delivery
and/or explicitly guaranteed performance.
Liquidated damages for failure to meet warranted/guaranteed values (performance,
efficiency, availability, etc.) can be accepted, provided they are reasonably limited per
fraction of failure and in the aggregate.
4. Limit the Liquidated Damages 4. Limit the Liquidated Damages

Liquidated damages under i tem 3 above shall in the total aggregate in any case not Such liquidated damages have to be limited according
exceed ... % of the contract value. to our Rules, usually as a percentage of the total order
value.
4.1 Chemtech
Liquidated damages under i tem 3 above shall in the total aggregate in any case not
exceed 10 % of the contract value.

4.2 Metco
Liquidated damages under i tem 3 above shall in the total aggregate in any case not
exceed 10 % of the contract value. For systems contracts liquidated damages shall not
exceed 5 % of the contract value.

4.3 Pumps
Liquidated damages under i tem 3 above shall in the total aggregate in any case not
exceed 15 % of the contract value or 100 % of the calculated gross margin, whichever
is lower.

4.4 Turbo Service

Liquidated damages under c lause 3 above shall in the total aggregate in any case not
exceed 10 % of the contract value.

5. Put a Cap on the Total Liability 5. Put a Cap on the Total Liability

The contract value shall be the maximum of our total liability under a contract. As to Our liability under a contract should be limited at 100 %
contracts having a value of less than 1 million, and if circumstance so require, you are of the order value or less, unless we are compelled to
permitted to accept a limit higher than the contract value, up to a maximum equivalent accept respective liability under compulsory law.
to 1 million in contract currency.
Warranty/guarantee clauses must include a maximum period after dispatch ex works
that cannot be extended for reasons outside of our control/responsibility.
6. Indemnity - Do not assume Customer's Liability
Hold harmless or indemnity clauses that transfer the customer's potential legal liability
associated with the subject of the contract to us, should not be accepted. If you have to
accept such a clause, then the clause must exclude any transfer of such liability to us in
the event of gross negligence or wilful misconduct on the part of the customer.
7. Third Party Property or Bodily Injury - The Legal Liability is the Limit
Liability, hold harmless or indemnity clauses under which our liability for loss of or
damage to customer's or third party property, or for bodily injury, exceeds our legal
liability under the applicable law, must not be accepted.
8. Insurance - Do not accept "Additional Insured" Clauses
Insurance clauses under which the customer has to be named as an additional insured
under our liability insurance policies, should not be accepted. If you have to accept
such a clause, then any commitment to name the customer as additional insured must
be limited to our indemnity, hold harmless, and/or defense obligations, as accepted by
us in the respective customer contract.
9. Limitation of Liability Clause - make sure that it is enforceable
In a "purchase order/confirmation of purchase order" - context where the terms and
conditions set forth in customer's form and in our form diverge (i.e. where you find
additional and/or conflicting terms and conditions in both forms "battle of the forms" -
scenario), you should with your customer fully bargain, carefully draft and sign or
otherwise acknowledge the terms and conditions forming the contract. You should
request in-house or external legal counsel for his/her advice while it is still possible to
request changes and bargain acceptable terms and conditions, i.e. prior to starting
contract performance.
This in particular applies if you are in doubt about whether or not a legally binding and
enforceable limitation/exclusion of liability clause forms part of proposed, exchanged,
discussed, and/or negotiated standard forms and other contract documents.
6. Indemnity
Do not assume responsibility for customer's potential
liability under the contract.
7. Third Party Property or Bodily Injury
Do not assume any liability which exceeds our legal
liability under the applicable law, i.e. accept only the
liability for your negligent acts or omissions.
8. Insurance
Do not accept "Additional Insured", Co-insured,
Waiver of Recourse, and Sulzer as Primary Insurer
Clauses. All such clauses make our insurance carriers
the insurers of our customers.
9. Avoid Battle of Forms
Avoid concurrent application of customers standard
purchase terms and our standard sales terms, by
either making our standard sales term the prevailing
terms or negotiating the critical clauses.
10. Double Signatures on the Contracts 10. Double Signatures on the Contracts

As an internal rule we request double signature on all contracts to further reduce the Sulzer Corporation requires signing by two persons on
risk of an oversight or a too optimistic assessment of liability risk exposures. all documents encompassing rights and obligations on
behalf of a Sulzer company.

Non-compliance with any of above guidelines must be app roved in accordance with the IF YOU HAVE TO DEVIATE FROM THE 10 GOLDEN
applicable authority and approval procedures, prior to submitting a binding offer or RULES, GET APPROVAL OF THE COMPETENT
entering into a binding contract. MANAGER